Vet-Advantage Blog

2018 Flea-Tick Pricing is a Whole New Ballgame for Veterinary Practices

Spring — and spring training — are not so far away. And when baseball season arrives, so do the fleas and ticks emerging from this deep-freeze winter.

It’s time to start talking with your customers now about prepping for flea-tick season. But this year, it should be a very different conversation from the past. Why?

Last summer, research firm Packaged Facts published a groundbreaking survey report on the national pet market outlook.* In that report, they stated that in 2017, “40% of pet owners buy pet products online, up from 37% the previous year. The age of ecommerce is drastically changing the U.S. market for products and services for dogs, cats, and other household pets.”

You’ll want to discuss these prices and client-communication strategies to help clinics overcome the client perception that online discount ordering is easier and cheaper.

Here’s how:

1. Introduce the latest developments and most popular products — and their benefits for clients.The big news for 2018 is oral preventatives, and specifically, chewables. Pet owners are enjoying the fact that they can give their pets a monthly “chewable treat” for flea/tick prevention. It’s so much easier to be compliant because their pets love them.

In an upcoming print issue of Veterinary Advantage magazine, we’re featuring an article on this topic. In that article, Zack Mills, DVM, owner of Duluth, Ga.-based Tiger Tails Animal Hospital, says the vast majority of clients at his practice are switching from topical to oral/chewables. “When it is easy to administer, clients are more apt to use the product. I saw this myself with Frontline and Heartgard. I would always give Heartgard because it was given easily as a treat. I would delay on doing the Frontline many times, forgetting to do it later.” (Look for the upcoming issue for a deep-dive into flea-tick season.)

However, many pet owners many not even know about chewables and will be delighted to hear about them from their trusted veterinarian. Make sure you provide product information the practice can pass along to clients.

2. Talk about the entire flea-tick category and strategic pricing.Manufacturers are working hard to provide incentives that keep preventative sales in the clinic. It’s better for the patient because veterinarians know the pet’s age, health conditions, etc. and can recommend the best preventative.

Yes, this has always been true, but a growing number of pet owners are bypassing their veterinarian to “buy cheaper” online. That’s where strategic pricing and clear communication come into play.

When it comes to pricing — show your customers the Pricing Index we mentioned for various flea and tick products. In addition, discuss the difference between margin and markup so practices can offer competitive prices.

What do we mean by the difference between margin and markup?

Marking up – that’s when the practice simply charges clients a higher price than what the clinic paid per-preventative to stock the supply. But this isn’t always the best approach.

Margin is a smarter approach, leading to more revenue overall. A recent industry article, sponsored by Norbrook, explained why:*

“The gross margin is the difference between the selling price and the cost of goods sold, divided by selling price, expressed as a percentage,” as shown in this image.

It went on to state, “It makes good financial sense to charge clients lower margins on maintenance drugs and higher margins on drugs used for short-term treatments.”

The reasoning is — for short-term needs, clients will likely purchase the treatment from the practice as recommended, on the spot. “Fluffy needs to go home with this treatment today and take it for three weeks… and then come back for follow up.” Clients typically don’t go online to shop for these products, so they’re not as price-conscious, and this gives practices more room for markup.

However, with flea-tick preventatives and other long-term/ongoing products, clients shop around. This is when they find better options online and bypass the practice.

UNLESS… the practice’s prices for longer-term products are competitive and easy to order. Lower markup on these products will benefit the practice by keeping sales in-house. And, if the practice is affiliated with an online pharmacy — clients can keep buying from the practice (especially if the online pharmacy offers special discounts and free shipping).

When there’s a markup mix, the overall profit potential is usually higher.

3.Introduce the latest manufacturer savings programs — which help with compliance AND keeping the purchases with the practice.